Legislative Update

Monday, August 31, 2015
August 31, 2015 Legislative Update

Senate Appoints Conferees on Economic Development Package

Over the last month, House Bill 117, NC Competes Act, passed the Senate chamber, but was rejected by the House, 111-2, in a motion not to concur with the Senate changes.  The vote outcome was due largely to the Senate’s addition to a change in the local option sales tax (LOST) distribution formula.

The Charlotte Chamber continues to support the components of House Bill 117 pertaining to economic development: JDIG, One NC and jet fuel tax exemption. We remain opposed to the proposed redistribution of local sales tax revenues.

Last week, one week after the House appointed conferees, the Senate appointed its conferees for HB 117.  Chairing the conference committee for the Senate is Majority Leader Sen. Harry Brown (R-Onslow).  Other Senate conferees include: Sen. Tom Apodaca (R-Henderson), Sen. Bob Rucho (R-Mecklenburg), Sen. Tom McInnis (R-Richmond), Sen. Chad Barefoot (R-Wake), Sen. Tamara Barringer (R-Wake), Sen. Bill Rabon (R-Brunswick), Sen. Rick Gunn (R-Alamance), Sen. Ralph Hise (R-Mitchell), and Sen. Tommy Tucker (R-Union).  Four Democrats that voted in favor of HB 117, are also on the conference committee: Sen. Floyd McKissick, Jr. (D-Durham), Sen. Angela Bryant (D-Edgecombe), Sen. Don Davis (D-Greene), and Sen. Ben Clark (D-Hoke).

The conferees will try to work out differences between the House and Senate proposals.  One of the biggest issues in the bill is the Senate’s proposal to change the LOST distribution formula.  The Senate’s proposal would change the current formula (75% of the tax being distributed by point of collection and 25% of the tax being distributed per capita), to a 50/50 split, half to be distributed by point of collection and half to be distributed per capita. 

The House remains adamantly opposed to changing the LOST distribution formula.  The Speaker went on record last week stating that the House Republican caucus voted overwhelmingly against the redistribution of LOST. 

Negotiations remain contentious and it remains uncertain as to how comprehensive economic development policies will pan out, either through HB117 or the budget.

Budget Negotiations Continue…

As previously reported, the House and Senate agreed to spend a total of $21.735 billion in the budget. Last week the General Assembly further agreed to subcommittee spending targets as they continue to negotiate a final budget.

  • Education
    (public schools, University of North Carolina System, community colleges): $12.05 billion
  • Health and Human Services
    (Medicaid, public health, mental health): $5.12 billion
  • Justice and Public Safety
    (courts, prisons, State Bureau of Investigation): $2.44 billion
  • Natural and Economic Resources
    (commerce, environment, agriculture): $372 million
  • General Government
    (Dept. of Cultural Resources, Office of the State Auditor, Dept. of Revenue, other state agencies): $425 million
  • Debt service: $715 million
  • Additional salary and benefits: $349 million
  • Reserve to handle unresolved budget matters: $121 million
  • Capital projects: $30 million

There was significant movement last week on budget negotiations, but the chambers still seem to be in disagreement about big issues.  House and Senate leadership met late last week with Gov. Pat McCrory at the Executive Mansion, but no new agreements were reported as a result of the meeting. Subcommittee chairs are now working on their budget areas while leadership continues to negotiate items such as the redistribution of the local option sales tax, economic development tools, teacher assistants, driver’s education, and Medicaid reform.

The House and Senate have less than three weeks to work out their budget differences in order to meet the new continuing resolution deadline of 11:59 pm Friday, September 18. 


Unemployment Insurance Bill Sent to the Governor

The Senate concurred to House changes to Senate Bill 15, Unemployment Insurance Law Changes last week. Only seven Senators voted against the bill. 

The bill adds quarterly reporting requirements by the Division of Employment Security (the Division) to several Joint Legislative Oversight Committees, increases beneficiaries’ requirement to make two job contacts per week to five job contacts per week, requires the individual seeking benefits to present photo identification to the Division, limits the number of weeks an individual may receive benefits, changes the weekly benefit amounts, creates a Board of Review for the purpose of determining appeals, policies and procedures, makes changes to the limitations on suits or proceedings for unpaid contributions, and changes charges to the employer’s account to quarterly. 

The bill now goes to the Governor.

Uber Bill Passes Final Legislative Hurdle

Last week, the House passed Senate Bill 541, Regulate Transportation Networks Companies. The bill requires transportation network companies, such as Lyft, Sidecar, and Uber, to buy insurance coverage for their drivers and passengers.  The bill also requires the company to preform nationwide criminal background checks on drivers. 

Uber publically endorsed the legislation, sending an email to its users on Thursday announcing the passage of SB 541.  The email urged its users to “take a moment and join us in thanking bill sponsors Sen. Bill Rabon, Sen. Floyd B. McKissick, Jr., and Rep. Bill Brawley for standing up for your right to a safe, dependable, on-demand ride!”

The bill now goes to the Governor.

 

Posted by: Kerri Burke, McGuire Woods Consulting LLC @ 12:00:00 am  Comments (0)
Monday, August 24, 2015
August 24, 2015 Legislative Update

N.C. House and Senate Finalize Negotiations on State Budget Spending Number

As reported last week, the state has been operating under a continuing resolution (CR) for its spending plan as the North Carolina House and Senate continue to negotiate a final state budget. This CR is set to expire August 31. With less than two weeks before the CR expires, House and Senate leadership have agreed to a total spending number, but continue to negotiate the details of the budget.

The House and Senate agreed to spend $21.735 billion on the North Carolina budget, which is approximately $265 million more than the Senate proposed in its budget and $420 million less than what the House proposed in its budget. 

The General Assembly will have to pass a budget bill, or another CR, before the August 31 deadline. 

 

N.C. House and Senate Continue Negotiations on Economic Development Proposals

House Bill 117 — NC Competes Act — passed the North Carolina Senate chamber last week, but was rejected by the House with a vote of 111-2 in a motion not to concur with the Senate changes.  The vote outcome was primarily due to the Senate’s addition to a change in the local option sales tax redistribution formula.

The bill now goes to conference committee, where the House- and Senate-appointed conferees will hash out a final package. Chairing the conference committee for the House is Rules Chairman RepRepresentative David Lewis (R-Harnett).  Other conferees include: Representatives Jason Saine (R-Lincoln), Bill Brawley (R-Mecklenburg), John Szoka (R-Cumberland), Charles Jeter (R-Mecklenburg), Susan Martin (R-Wilson), Jeff Collins (R-Nash), Bob Steinburg (R-Chowan), Ted Davis (R-New Hanover), Stephen Ross (R-Alamance), John Bradford (R-Mecklenburg), Jeffrey Elmore (R-Wilkes) and Leo Daughtry (R-Johnston).  Four Democrat members join the Conference Committee: Representatives Ken Goodman (D-Richmond), Rodney Moore (D-Mecklenburg), Susi Hamilton (D-New Hanover) and Darren Jackson (D-Wake). 

The Senate has not yet appointed conferees. 

 

N.C. House Passes Changes to Unemployment Insurance

The North Carolina House passed Senate Bill 15 — Unemployment Insurance Law Changes —  last week. The changes made earlier this month by the House include: changes to the reporting requirements; modifying the effective date to January 1, 2016; changes to the limitations on suits or proceedings for unpaid contributions; amendments to the photo identification requirement; amendments to the procedure for protest claims; changes to the weekly benefit amounts; and changing the charges to the employer’s account to quarterly. 

Among other provisions, the bill increases the current job contact requirement for those receiving benefits from two contacts per week to five contacts per week, while giving the recipient more flexibility regarding when and how those contacts are made.   Representative Jonathan Jordan (R-Ashe) moved to amend the bill on third reading to change the requirement to three contacts per week.  Representative Jordan stated on the floor that his amendment would bring North Carolina into compliance with the overwhelming majority of other states, while still increasing North Carolina’s current requirement from two contacts to three contacts per week.  Representative Julia Howard (R-Davie) spoke in opposition to Representative Jordan’s amendment, arguing the Senate would not agree to any further changes.  Representative Howard concluded that if the House passed Representative Jordan’s amendment, the House risked the entire bill failing in the Senate.  Representative Jordan’s amendment failed, 49-60.

The bill now goes to the Senate for concurrence. 

 

"Uber Bill” Passes N.C. House Finance Committee

Last week, the North Carolina House Finance Committee gave approval to Senate Bill 541 — Regulate Transportation Networks Companies — with little debate.  The bill will now go to the full House for a final vote this week.  The bill requires transportation network companies (TNC) to buy insurance coverage for their drivers and passengers and preform nationwide criminal background checks on drivers.  Uber, Lyft and other TNCs have provided input in the development of the proposed regulatory framework. 

 

Medicaid Reform Negotiations Continue

Last week, the North Carolina House voted to not concur with changes made by the Senate to House Bill 372 — Medicaid Transformation/HIE/PrimaryCare/Funds. The bill will now go to conference committee to hash out the differences. The House- and Senate-appointed final co-chairs for the House will be Representatives Donny Lambeth (R-Forsyth) and Nelson Dollar (R-Wake).  The Senate will have three co-chairs: Senators Ralph Hise (R-Mitchell), Louis Pate (R-Wayne) and Tommy Tucker (R-Union).

The House and Senate, as well as the governor, all agree that they want to move away from the state's current fee-for-service system to a full-risk capitated system. Disagreements on who will administer the program have divided the Senate and the House.

The Senate version creates roles for both managed care organizations (MCOs) and provider-led entities (PLEs). The three MCOs would operate on a statewide basis, while the PLEs would operate in regions. On the other hand, the House version permits provider-led entities to bid for contracts and manage networks of at least 30,000 Medicaid recipients.

Last week, House leaders announced that they would pursue a hybrid model, moving to agree with the Senate that MCOs and PLEs could operate in the state. Also on the negotiating table will be whether a new department will be created to oversee the state's Medicaid program. Under the Senate's plan, a new Department of Medicaid would be responsible, while the House prefers to keep the program under the Department of Health and Human Services.

 

 

 

Posted by: Kerri Burke, McGuire Woods Consulting LLC @ 12:00:00 am  Comments (0)
Monday, August 17, 2015
August 17, 2015 Legislative Update

New Temporary Spending Plan Passes as Budget Negotiations Continue

North Carolina Senate Bill 534 — 2015 Continuing Budget Authority — commonly referred to as a continuing resolution (CR), expired Friday at 11:59 p.m.  It was passed at the end of June with the hope of having a budget agreement by August 14.  In anticipation of Friday's midnight deadline, the House and Senate passed a revised 2015 Continuing Budget Authority bill.  This CR extends the date of the prior CR, as well as: 1) appropriates funds for the 2015-16 fiscal year to both the JDIG Reserve and the One North Carolina Fund to satisfy grant obligations and statutory transfers; 2) appropriates funds for the Office of Information Technology Services; 3) appropriates receipts for the At-Sea Observer Program fees; 4) appropriates additional Temporary Assistance for Needy Families (TANF) funds; 5) authorizes state agencies to spend certain grant funds; and 6) revises the child care subsidy policy to exclude a nonparent caretaker relative's (grandparent's) income in determining eligibility.

The new CR is set to expire at 11:59 p.m., August 31, 2015.  Both House and Senate leaders have indicated that they are close to an agreement and are optimistic to have a budget agreement by that time. 

Heightened Debate on Sales Tax Redistribution Proposal

As reported last week, House Bill 117 — NC Competes Actwas revised by the North Carolina Senate as a budget compromise on several economic development measures and a redistribution of the local option sales tax (LOST). The economic development portion of the bill included changes to the JDIG program, the One North Carolina program, a three year transition to single sales factor corporate income tax apportionment, and tax exemptions for data centers and aviation fuel. The LOST redistribution would change the current formula (75 percent of the tax distributed by point of collection, 25 percent of the tax distributed per capita) to a 50/50 split (half to be distributed by point of collection and half to be distributed per capita). 

HB 117 passed the Senate last week and was sent to the House for consideration. The two senior finance chairmen in the House, Representative Bill Brawley (R-Mecklenburg) and Representative Jason Saine (R-Lincoln), remain opposed to the redistribution of the LOST contained in the bill.  Senate leaders held a rally Wednesday in support of their proposal to redistribute the LOST. 

Incentives and Sales Tax Redistribution

The Charlotte Chamber applauds the Senate for including in their most recent legislative proposals pivotal economic development tools, such as JDIG, the ONE North Carolina Fund and the extension of the sales tax exemption on purchases of jet fuel. We support these policies that will help North Carolina and our region compete effectively with neighboring states for jobs and economic prosperity.

However, we remain concerned about the inclusion of the amended sales tax redistribution plan. While the revised plan reduces the amount to be redistributed from earlier proposals, the new proposal will still impact local budgets across the state, resulting in potential tax increases to citizens and businesses.

Mecklenburg County, like other counties, is already re-distributing a portion of its sales tax to the benefit of rural areas and continues to contribute to the Utility Account with a portion of all JDIGs awarded in the county. This additional cut to local budgets, absent other offsetting impacts, will impact infrastructure and other citizen services and potentially result in property tax increases.

We look forward to continuing to work with the House, Senate and the governor to ensure Charlotte and all regions across the state are supplied with alternative economic development funding tools, while not placing counties at a competitive disadvantage to supply long-term infrastructure and services.

Click here to watch Mayor Dan Clodfelter and the Charlotte Chamber of Commerce's Senior Vice President Natalie English share a special message about plans for sales tax redistribution.

N.C. Senate Approves Taxpayer Bill of Rights Act

Last week, the North Carolina Senate passed Senate Bill 607 — Taxpayer Bill of Rights Act (TABOR).  The bill proposes three amendments to the North Carolina Constitution limiting state spending and increasing the state's savings.  The first amendment would cap the tax on income at 5 percent.  The current cap on income tax is 10 percent.  The second amendment would create a new constitutionally required Emergency Savings Reserve Fund.  The third and final amendment would create a new limit on the growth of state spending, capping it at the percentage of inflation plus population growth.  Under this bill, the North Carolina General Assembly could increase the spending limit only if approved by a two-thirds vote of both chambers.

The bill was amended Monday to: 1) set a cap on the "rainy day fund" at 12.5 percent of the amount appropriated from the general fund for capital and operating expenses for the prior fiscal year; and 2) put all three of the constitutional amendment questions contained in the bill into one question on the presidential primary ballot in spring 2016.  The bill now goes to the House for consideration.

Employee Misclassification Reform Passes N.C. Houses

After significant debate and negotiations, the North Carolina House passed House Bill 482 — Employee Misclassification Reform.  The House adopted changes with a vote of 111-2, which amends the factors used to determine independent contractor status.  These changes came in light of objections raised by FedEx regarding how it classifies its carriers.

The bill will be sent to the Senate for committee assignment.  The Senate passed a similar bill earlier this year and it is unclear whether the Senate will adopt the House's version or propose something different.

N.C. Senate Passes Medicaid Reform Proposal

The North Carolina Senate passed House Bill 372 — Medicaid Transformation/HIE/PrimaryCare/Funds.  An attempt by Senate Democrats to expand Medicaid coverage to an additional 500,000 North Carolinians was defeated along party lines.  It is undetermined what the House will do with the proposed compromise bill.

The bill was proposed by the Senate as a compromise, creating roles for both managed care organizations (MCOs) and provider-led entities (PLEs), and creates a new Department of Medicaid (DOM).  Under the Senate’s plan, the DOM would have full budget and regulatory authority, but the General Assembly would determine eligibility categories and income thresholds. The bill requires DOM to submit requests for waivers and state plan amendments to the Centers for Medicare and Medicaid Services (CMS), and report recommended statutory changes to the newly created Joint Legislative Oversight Committee on Medicaid by May 1, 2016.  Twelve months after CMS approval, capitated full-risk contracts would begin.

N.C. House Transportation Committee Approves ‘Uber’ Bill

Last week, the North Carolina House Transportation Committee gave approval to Senate Bill 541 — Regulate Transportation Networks Companies The bill will receive another committee hearing in the House Finance Committee before heading to the House floor. The bill requires companies to buy insurance coverage for their drivers and passengers, as well as perform nationwide criminal background checks on drivers.  Uber, Lyft and other transportation network companies have provided input in the development of the proposed regulatory framework. 

Posted by: Kerri Burke, McGuire Woods Consulting LLC @ 12:00:00 am  Comments (0)
Monday, August 10, 2015
August 10, 2015 Legislative Update

N.C. Senate Unveils Amended Economic Development Package

The North Carolina General Assembly continues to negotiate as they work on a finalized budget deal. With no agreement on the budget bill, and negotiations moving slowly on big-picture issues like economic development and tax reform, it looks as though the temporary budget resolution (expiring August 14) will need to be extended as the House and Senate debate key budget provisions.  

Last week in the Senate Finance Committee, President Pro Tempore of the Senate Phil Berger (R-Guilford) and Senate Majority Leader Harry Brown (R-Onslow) presented an amended version of House Bill 117 — N.C. Competes Act — a compromise on several economic development measures and a redistribution of the local option sales tax (LOST). 

The bill passed the House several months ago in a different format and has since been stalled in the Senate. Highlights of the House version include:

  • No changes to the LOST distribution formulas.
  • An increase in the amount commerce can commit in JDIG awards.
  • A modified and extended JDIG program.
  • A modified qualification for single sales factor apportionment of income by qualified capital intensive corporations.
  • An extended sales tax refund for sales tax paid on fuel by an interstate passenger air carrier in excess of $2.5 million.
  • A sales tax exemption on sales of data center equipment and electricity located and used at the data center for data centers investing at least $75 million within a five-year period.

In the Senate Finance Committee, Senator Berger opened his remarks by stating that this proposal was an effort to move the budget negotiations forward by addressing several provisions separate from the budget bill.  The economic development portion of the bill included changes to the JDIG program and One North Carolina Fund, a three-year transition to single sales factor, and tax exemptions for data centers and aviation fuel.  Senator Berger further stated other economic development and tax issues were still being debated.  Items such as the corporate income tax reduction and the research and development credit were not included and will be key in budget negotiations.

Debate in the committee focused on the redistribution formula for LOST.  Senators from Mecklenburg and Buncombe counties spoke out adamantly in opposition to the change.  Senator Jeff Tarte (R-Mecklenburg), Senator Joel Ford (D-Mecklenburg), Senator Terry Van Duyn (D-Buncombe) and Senator Floyd McKissick (D-Durham) were among those who spoke in opposition. 

HB 117 will be heard in the Senate Appropriations Committee Monday afternoon, August 10, at 3 p.m.. Review a full summary from fiscal research.

Incentives and Sales Tax Redistribution

The Charlotte Chamber applauds the Senate for including in their most recent legislative proposals pivotal economic development tools, such as JDIG, the ONE North Carolina Fund and the extension of the sales tax exemption on purchases of jet fuel. We support these policies that will help North Carolina and our region compete effectively with neighboring states for jobs and economic prosperity.

However, we remain concerned about the inclusion of the amended sales tax redistribution plan. While the revised plan reduces the amount to be redistributed from earlier proposals, the new proposal will still impact local budgets across the state, resulting in potential tax increases to citizens and businesses.

Mecklenburg County, like other counties, is already re-distributing a portion of its sales tax to the benefit of rural areas and continues to contribute to the Utility Account with a portion of all JDIGs awarded in the county. This additional cut to local budgets, absent other offsetting impacts, will impact infrastructure and other citizen services and potentially result in property tax increases.

We look forward to continuing to work with the House, Senate and the governor to ensure Charlotte and all regions across the state are supplied with alternative economic development funding tools, while not placing counties at a competitive disadvantage to supply long-term infrastructure and services.

N.C. House Unveils New Infrastructure Bond Proposal

Last week, the North Carolina House introduced House Bill 943 — Connect N.C. Bond Act of 2015 — outlining a bond referendum to cover North Carolina infrastructure spending. 

The proposal asks for $2.8 billion in bonds: $2.46 billion for infrastructure and $400 million for transportation.  The bond also funds $900 million toward the UNC system campuses, including a new western campus of the North Carolina School of Science and Math.  Additionally, the bond puts $500 million in a “public schools capital assistance program.”  The House’s bond proposal takes into account appropriations for North Carolina transportation needs in the House’s budget proposal.

The bill was heard on the House floor Thursday.  Representative Jimmy Dixon (R-Duplin) proposed an amendment to change the date of the referendum from this November to the date of the presidential primary in 2016.  The amendment passed 89-11

The proposal will now to go the Senate. The Senate proposed their own transportation and infrastructure plan last week. The Senate’s plan did not include a bond referendum.

N.C. Senate Proposes Taxpayer Bill of Rights

Last Thursday, the Senate Finance Committee passed Senate Bill 607 — Taxpayer Bill of Rights (TABOR).  The bill proposes three constitutional amendments to limit state spending and increase state savings. 

The first part modifies Section 2 of Article V of the North Carolina Constitution to cap the tax on income at five percent.  The current cap on income tax is 10 percent.  The second part creates a new constitutionally required Emergency Savings Reserve Fund.  The third and final part creates a new limit on the growth of state spending, capping at the percentage of inflation plus population growth.  Under this bill the North Carolina General Assembly could increase the spending limit only if approved by a two-thirds vote of both chambers. 

Because these are proposed amendments to the North Carolina Constitution, the bill must pass by a vote of three-fifths of each chamber and then must be approved by a majority of the voters of the state.  The bill puts the three proposed amendments on the presidential primary ballot in 2016.

N.C. Senate Passes Bill to Deal with EPA Clean Power Plan

The North Carolina Senate has amended the one-page House Bill 571, previously titled Judicial Review of EPA Clean Power Plan, and replaced it with the now four-page Implement Clean Power Plan.

The bill requires state agencies, boards and commissions to implement a clean power plan consistent with the Federal Clean Air Act.  The previous version prohibited state agencies, boards and commissions from implementing the Environmental Protection Agency’s Clean Power Plan until judicial review of the plan is resolved or July 1, 2016, whichever is later.

The current proposal requires the state to reduce carbon dioxide emissions only if the improvements are “technically achievable and cost-effective considering any additional Clean Air Act requirements that may be triggered by such … improvements.” 

The vote to pass was along party lines: 31-12. The measure now goes to the House for consideration.

N.C. House Advances Employee Misclassification bill

Last week, the North Carolina House Judiciary II Committee voted to remove exemptions for courier services included in House Bill 482 — Employee Misclassification Reform The bill was reported favorable out of the House Appropriations Committee Wednesday.  The bill was referred to the House Committee on Rules, but was later withdrawn and placed on the House calendar for Monday’s evening session.

N.C. Senate Amends Medicaid Reform Measure

The North Carolina Senate Committee on Health Care passed a new version of the Medicaid reform bill in a Senate committee substitute (SCS) to House Bill 372 — 2015 Medicaid Modernization.

The SCS, now titled Medicaid Transformation/HIE/Primary Care/Finds, combines the Senate’s Medicaid reform proposal, the establishment of a Health Information Exchange (HIE) Network Authority and raising the rates of primary care physicians, which were all included in the Senate’s proposed budget this year. The SCS does differ from the Medicaid reform proposal that they included in the budget. Senate leaders said that the SCS was an attempt to make compromises in order to find more common ground with the governor and House. Medicaid reform has been a major sticking point between the chambers this year.

The SCS also creates the new  Department of Medicaid (DOM).  The DOM will have full budget and regulatory authority, but the General Assembly would determine eligibility categories and income thresholds. The bill requires DOM to submit requests for waivers and state plan amendments to the Centers for Medicare and Medicaid Services (CMS), and report recommended statutory changes to the newly created Joint Legislative Oversight Committee on Medicaid by May 1, 2016.  Twelve months after CMS approval, capitated full-risk contracts will begin.

This proposed version of the bill creates roles for both managed care organizations (MCOs) and provider-led entities (PLEs). MCOs would compete for three statewide contracts, and PLEs would compete for up to 12 regional contracts. The DOM has the ability to create anywhere from five to eight regions in the state.

The second section of the SCS establishes the Statewide Health Information Exchange (HIE) Authority, which will be responsible for overseeing and administering the HIE network. The proposal provides for $8 million in funds in order to “allow a seamless transfer of patient records between every provider in the state.” Additionally, the North Carolina HIE Advisory board is created in the proposal, which will advise the authority on HIE matters.

Finally, the proposed legislation will end the state’s contract with Community Care of North Carolina (CCNC), a nonprofit that provides Medicaid case management services in order to help contain costs. Beginning May 1, 2016, the money that would have been spent on that contract will instead be used to raise the rates paid to primary care physicians and OB/GYNs to 100 percent of Medicare rates.

The SCS will be heard in the Senate Appropriations Committee Monday, August 10, at 3 p.m..

N.C. House and Senate Differ on Charter School Oversight

The North Carolina House voted not to concur with House Bill 334 — Transfer Office of Charter Schools When the House passed HB 334 in April, the bill dealt with modifications to the charter school application process and authorizing the ability for charter schools to charge fees for extracurricular activities. 

When the Senate took up the bill in late July, they modified the House’s version to instead establish the Office of Charter Schools and modify the charter school advisory board.  The newly formed Office of Charter Schools would be subject to the oversight of the State Board of Education, not the Department of Public Instruction (DPI).  Currently, DPI has oversight over charter schools.

The bill now goes to a conference committee. 

N.C. Governor McCrory Appoints New Cabinet Secretaries

As previously reported, North Carolina Department of Transportation (NCDOT) Secretary Tony Tata resigned.  Last week, Governor McCrory named Nick Tennyson the new NCDOT Secretary.  Tennyson has previously served as the mayor of Durham and has been chief deputy secretary at NCDOT since 2013. 

Additionally, last week, North Carolina Department of Health and Human Services (DHHS) Secretary Dr. Aldona Wos announced her resignation.  Rick Brajer, a Raleigh businessman, was appointed to fill her position.  Brajer has an MBA from Stanford University’s Graduate School of Business and most recently worked for ProNerve, LLC.  He told reporters after the news conference announcing his appointment that he believes containing Medicaid program costs will be a core priority for his administration and continues to emphasize Secretary Wos’ Medicaid reform philosophy. 

Posted by: Kerri Burke, McGuire Woods Consulting LLC @ 12:00:00 am  Comments (0)
Monday, August 3, 2015
August 3, 2015 Legislative Update

Budget Negotiations Continue, N.C. House Holds Public Comment Meeting

Last week, North Carolina House and Senate finance chairs met to discuss budget differences in tax policy and economic development programs, as they continue to negotiate a final state budget deal. Although meetings are occurring, it is almost certain that the House and Senate will not be able to come to an agreement on the 2015-2017 budget by the August 14 deadline imposed by the Continuing Resolution (CR) passed in late June. The chambers will most likely have to agree to another CR or extend the current one.  Last week, the General Assembly fiscal staff reported a surplus of $445 million, $45 million more than expected.  It is uncertain as to how this will impact the budget bill or a future CR.

On July 29, the House Appropriations Committee heard public comment on the Senate’s version of the budget. Testimony and presentations focused on teacher assistants, driver’s education, state employee salaries and benefits, economic incentives, and the Senate’s proposal to change the distribution formula for the local option sales tax.  Speakers included teachers, principals, superintendents, AAA of the Carolinas, the North Carolina Economic Developers Association, representatives from local chamber organizations, including the Charlotte Chamber, and representatives from local governments.  Natalie English of the Charlotte Chamber testified, urging legislators to reinstate much-needed Job Development Investment Grant (JDIG) funding and retain the current formula for sales tax redistribution.

As previously reported, the Senate’s proposed budget includes a sales tax redistribution, which changes the formula over the next four years so that, effective 2019, 20 percent would be distributed to the county and city where a purchase is made, and 80 percent of sales tax collected would be distributed based on population. Under current law, 75 percent of the sales tax goes to the county and city where the purchase is made, while 25 percent is distributed across the state based on population. The House’s proposed budget does not include this change and would leave the current distribution formula as it is today.

LEGISLATIVE ALERT

As the House and Senate conferees negotiate the differences in their respective budget proposals, it is critical to contact members of the conferee committees to urge them to expand the Job Development Investment Grant (JDIG) program and to not change the current sales tax distribution formula.

The JDIG program is critical to our state for continued job growth. The Senate included changes to the program in their budget which limits its use in urban counties. The House passed HB 117 early in the session which expands the program. North Carolina is not in the economic development game without the program.

The proposal to redistribute sales tax collection would not be good for Mecklenburg County or the state of North Carolina. Mecklenburg county and many other counties would receive less revenues under a redistribution impacting infrastructure investments, property tax rates and job creation. There are also potential impacts on bond ratings for communities because current revenues are already pledged for debt. Urge members of the conference committees not to include this in the final budget.

Members of the conference committees can be found at this link. Those from Mecklenburg County are included below. Click on their names to find contact information.

Representative Bill Brawley, Co-Chair
Representative Rob Bryan
Representative Dan Bishop
Representative John Bradford
Representative Charles Jeter
Representative Jacqueline Schaffer
Representative Kelly Alexander
Representative Becky Carney
Representative Tricia Cotham
Representative Rodney Moore
Senator Jeff Tarte

N.C. House Moves Forward Employee Misclassification Reform

Last week, North Carolina House Bill 482 – Employee Misclassification Reform – passed the House Judiciary II subcommittee.  Representative Rick Glazier (D-Cumberland) voiced some disappointment that the bill did not contain a provision that would protect the complaining employee from retaliation; Representative Dan Bishop (R-Mecklenburg) vowed to work on those concerns.

Representative Glazier also expressed concern regarding the definition of nonprofits.  The North Carolina Center for Nonprofits testified at the committee meeting that it was an unintended consequence from the bill with regard to the workers' compensation statutes, but the issue could be moot if one of the regulatory reform bills, House Bill 760 or House Bill 765, were enacted.

The bill will be heard by the full House Judiciary II Committee this Tuesday, August 4.

Transportation Issues in the Spotlight

North Carolina Department of Transportation (NCDOT) Secretary Tony Tata announced last week that he has resigned, citing family and his writing career as reasons. The resignation was effective immediately. NCDOT Deputy Secretary Nick Tennyson will serve as interim secretary. Both Tennyson and North Carolina Representative Charles Jeter (R-Mecklenburg) have indicated interest in being appointed by the governor to serve as the new secretary.

In other transportation news, Senate leaders held a news conference last week to discuss the Senate’s plan to address the state’s transportation needs. Senators Wesley Meredith (R-Cumberland), Ralph Hise (R-Mitchell), Michael Lee (R-New Hanover), Warren Daniel (R-Burke) and Bill Rabon (R-Brunswick), co-chairs and members of the Senate Transportation Committee, hosted the news conference.

The Senate focused their comments on their disagreement with Governor McCrory’s proposed infrastructure bond. The Senate’s transportation funding plan puts more than $200 million per year in recurring funds toward maintenance priorities, ports modernization and other projects.  It also adds $139 million to repair 400 structurally deficient bridges in the next two years, $70 million for pavement preservation and $67 million for road improvement projects.

N.C. House Debates Comprehensive Insurance Law Changes

North Carolina House Bill 287 — Amend Insurance Laws-AB — is an agency bill that makes technical corrections to laws governing professional employer organizations, insurance company deposits, continuing care retirement communities, health insurance external review, health insurance fiduciaries and insurance company names.  The bill also creates a study of the health insurance premium rate review process and moneys from the insurance regulatory fund.

The bill includes a provision allowing an itemized individual income tax deduction for investors who incur losses from criminally fraudulent investment arrangements. When an individual makes financial investments, they receive a statement of income regarding those investments.  That statement of income is used in determining the individual’s tax liability.  Under current North Carolina law, if that investment turns out to be fraudulent due to a Ponzi or pyramid scheme, for example, the tax payer cannot go back and reclaim taxes he or she paid on the income that never actually existed.  The provision in HB 287 is set to correct this issue.  There is a federal law that addresses this issue regarding federal individual tax liability. 

Last week, HB 287 bounced from committee to the House floor and back to committee again.  The House Judiciary II Committee reported the bill favorable on July 28.  The bill was then calendared for the following day, but later withdrawn and re-referred to the House Finance Committee where it was given favorable report the following day.  The bill now sits in the House Rules Committee.

Posted by: Kerri Burke, McGuire Woods Consulting LLC @ 12:00:00 am  Comments (0)
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